Will incorporating protect my family's savings?

Updated October 1, 2026

It's one of the most common questions new owners ask, especially in cleaning, landscaping and the trades: if a customer sues, or a subcontractor damages something, can they come after my house or my family's savings? The short answer is that a corporation helps, but it's only one of three layers. Most of the day-to-day protection comes from insurance and written contracts.

The three layers

1. Structure. A sole proprietorship gives you no separation: the business's debts and lawsuits are yours personally. A corporation is a separate legal person, so business claims are generally limited to what the corporation owns.
2. Insurance. Commercial general liability (CGL) covers damage and injuries you cause to others. Add professional liability if you give advice or design work, and coverage for your tools and vehicle. Insurance pays the claim, so it protects you whatever your structure.
3. Contracts. A written quote or contract with every customer, and a written agreement with every subcontractor, sets out who is responsible for what, when payment is due, and what happens if the work isn't right.

What a corporation doesn't protect

• Your own mistakes. If you personally do the work negligently or cause the damage, you can be sued personally as well as the company.
• Personal guarantees. Banks, equipment lenders and many landlords ask owners of new corporations to guarantee loans and leases personally. If you sign one, that debt is yours too. Ordinary customer and subcontractor contracts don't usually need one.
• Government remittances. Directors can be held personally liable when a corporation doesn't send the CRA the payroll deductions or HST it collected. Keep these in a separate account and pay them on time.
• Mixing money. Treat the corporation as separate: its own bank account, its own contracts in its name, and no paying personal bills from it. Taking money out while the company owes tax can also make you personally liable for that tax.

When incorporating usually makes sense

• You use subcontractors or employees, so someone else's work can create claims.
• The work can cause real damage (water, fire, structural, vehicles, other people's property).
• You have a home, savings or investments you want kept separate.
• Profit is high enough that you can leave some in the company, where active business income is taxed at the lower small business rate.

If you're testing a low-risk side business with few assets, starting as a sole proprietor with good insurance and contracts is common, and you can incorporate later.

What it costs

If you use subcontractors

• Get proof of their liability insurance before they start, and keep a copy.
• Get a WSIB clearance certificate where it applies, so you aren't charged for their premiums.
• Use a written subcontract: scope, standard of work, who fixes problems, and when they're paid.
• Hold back part of each payment until the customer has accepted the work.

Every business is different. Before you decide, a one-hour meeting with a business lawyer or accountant is worth it. See also Sole proprietor or corporation?

General information, not legal, tax or insurance advice.

Official sources

• Register or incorporate in Ontario
• WSIB clearance certificates
• NUANS name search